p2pnet.net News View:- Is p2p all the Big Four need to consider?

Dr Michael A. Einhorn is an economic expert active in the media, entertainment, and intellectual property. He’s an advisor to CONSOR Intellectual Asset Management, a consultant to Digonex Technologies, and the author of Media, Technology, and Copyright: Integrating Law and Economics (Edward Elgar Publishers, 2004).

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Do the big labels need new thinking?
By Dr Michael Einhorn

Let me suggest a first key issue in distribution. Difficulties are manifest and not necessarily traceable to the purported harms of online piracy.

The most important single marketing channel for major label promotion of new sounds is broadcast radio on roughly 6,000 high-powered commercial FM stations. By financing independent radio promotion to access station playlists, labels spend around $500,000 per song to achieve widespread radio play; the amount is roughly twice the size of a reasonably expected advance that would be needed to record the entire album in a high-quality studio. Promotional activity on radio complements marketing in major retail outlets where 97 percent of CDs are now sold; shelf space is available only to the best promoted (i.e., radio) sounds and therefore entirely unavailable to a great number of independent labels. Through an exemption in

American copyright law, record labels do not receive royalties for sound recordings performed on analog public radio broadcast in the U.S.

Through radio play, a label can present a song 25 to 100 times per day on a particular station; the gains for concentrated listenership dwarf any contemporary medium in the U.S. However, the efficiency of radio play — which can wax or wane regardless of relative rank — depends on the ability of music radio to reach target audiences that apparently have lost some interest in the medium. With more spending power and rush hour time on their hands, older radio listeners do listen to music radio on country and adult contemporary formats. But country formats are now losing both audiences and stations, and AC programming is mixed with news, talk, and sports. The growing depletion of marketing potential to this group is evident.

But perhaps even more importantly in the long run, there is a demonstrable dropoff in the interest of the important teenage demographic that would be most attracted to buying new releases on rock, urban, and top 40 stations.

A Canadian survey performed in 2003 by the Culture Statistics Program, a joint endeavor of the Canadian Radio Telecommunications Commission and Department of Canadian Heritage, made the point in painful detail. Researchers found that the average number of listening hours per week in Canada fell from 20.5 hours to 19.5 hours in 1999-2003. During the same time, the average count per teenager fell from 11.5 to 8.5 hours. Declines were found in each province but for rural (and relatively poor) Prince Edward Island. Evidently, while radio is a convenient medium for reaching audiences during work and rush hours, it is less so for teenage buyers less prone to work and drive road vehicles, and more prone to use video games and the Internet during home hours.

The upshot is that present business models for labels are being tested by other considerations that go beyond p2p file-sharing. As the U.S national tv networks have learned, media fragments and audiences disperse. Disregarding for a moment the unauthorized use of copyrighted materials on p2p networks, more fundamental changes are happening that compel proactive and creative thinking on the part of record companies and their distributor arms. It would be a tragic example of “group think” if these trends were ignored for the safety of more comfortable positions.

This entry was posted on Tuesday, September 28th, 2004 at 7:46 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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